This copy is for your personal, non-commercial use only. To order presentation-ready copies for distribution to your colleagues, clients or customers, click the "Reprints" link at the bottom of any article.

The Retirement Bubble

Recently I’ve been studying what many are calling a financial advisor retirement crisis. Financial pundits far and wide have been discussing the ramifications of the bubble of baby boomer brokers that are staring retirement in the face. What will happen when the lion’s share of financial advisors head for Florida?
Chances are, if you’re reading this you’re no further than an eight iron away from retirement yourself. So what happens to all your clients when you decide to hit the 19th hole? Who takes over managing their ongoing fees?

Much like the demise of Social Security, the demise of financial advisors will be caused by us damn baby boomers. We don’t mean it. It’s just a numbers game. As the years pass and the water hazard of financial advisors dries up, someone or something is going to have to replace them.

One major strategy of the past decade has simply been to buy advisors away from other firms. As a recruiter, I have had many advisors open a conversation with me by saying, “OK, let’s just cut to the chase. How much can you give me?” Thanks to these types of calls, I learned how to make a static noise with my mouth and say, “Hey, I might lose you, I’m going into a bad cell area… click.”

That strategy appears to have run its course. Now, many firms are looking at ramping up their training programs and growing their own advisors from within. Will this strategy succeed in providing enough new advisors to carry the bag for the next 18 holes?

If firms are counting on a new generation of financial advisors coming out of our colleges today, I’d be worried. You see, I have a son in college right now and from what I can tell, he and his friends aren’t going to be much help.

Personally, I think there is a far bigger threat to our industry than the financial advisor retirement crisis. As I write this, I guarantee you that somewhere, in a cubicle or garage, there is a team of geeks working on an iPad app that will revolutionize the industry and make all financial advisors obsolete. It will be sold on iTunes, and cost less than the ticket charge on a no load mutual fund trade. Ouch.

If you don’t think technology can turn an industry upside down, look no further than the record industry. Anybody bought an album lately? The old telephone companies, with all their fees, taxes and charges, might be another industry to examine. Can an industry that charges $10 to mail a trade confirmation really feel untouchable?

Here’s how it could play out: As more and more advisors retire, the young bucks can’t keep up and customer service goes in the toilet. Firms will have to add more and more fees to their clients’ brokerage accounts to finance the hiring of more employees. As customer dissatisfaction reaches its peak, the geeks will roll out their killer app and Wall Street starts crumbling.

The award trips, trail commissions and, more importantly, sponsor squishy balls will all be destined for the Financial Advisor Museum in Washington D.C. As will an ample supply of pocket hankies and bright red ties.

All things financial will be accessible and at your greasy fingertips 24/7. Trading a stock or mutual fund will be as easy and cheap as downloading a song from our deceased friends, Napster and LimeWire. Technology changes things. Why can’t it change us?

As sure as my next birthday is looming, the financial advisor retirement crisis is looming as well. As firms scamper to keep a close eye on their retiring advisors, they would also be wise to keep the other eye on the Mac App store.